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Brazilian Oil Finds Mean Shrinking Middle East Imports

Written By Brian Hicks

Posted April 24, 2008



Like most Americans, I often wonder what the world would be like if we weren’t so dependent on all of that oil that flows through the Persian Gulf.

This, of course, has always been something of a fairy tale. So every night we are treated to an unending stream of bad news from an area of the world that we will never completely understand. Oil is the reason.

But without that black gold, I think I can safely say that what is happening in the Middle East would be as interesting to us as what’s going on in say……Borneo.

The big news there these days is that they found out where those mysterious pygmy elephants may have come from. It looks like its Java. (Not the famous software, but the island).

And while that may be kind of interesting to some, most people could care less.

That’s probably how we would feel about the news out of Syria, Iran and all of the places in between if it weren’t for all of that crude. It would be a giant “Who cares”.

Saddam Hussein? Never heard of him.

But that’s just not the case. So instead we ship our blood and treasure to places we can’t pronounce and hope it all works out.

However, according to a recent article in Bloomberg, what is going on in Brazil lately may just bring those days about. You see, Brazil is about to become our new best friend.

From Bloomberg by Joe Carroll entitled: Brazil Oil Finds May End Reliance on Middle East, Zeihan Says.

“Brazil’s discoveries of what may be two of the world’s three biggest oil finds in the past 30 years could help end the Western Hemisphere’s reliance on Middle East crude, Strategic Forecasting Inc. said.

Saudi Arabia‘s influence as the biggest oil exporter would wane if the fields are as big as advertised, and China and India would become dominant buyers of Persian Gulf oil, said Peter Zeihan, vice president of analysis at Strategic Forecasting in Austin, Texas. Zeihan’s firm, which consults for companies and governments around the world, was described in a 2001 Barron’s article as “the shadow CIA.”

Brazil may be pumping “several million” barrels of crude daily by 2020, vaulting the nation into the ranks of the world’s seven biggest producers, Zeihan said in a telephone interview. The U.S. Navy’s presence in the Persian Gulf and adjacent waters would be reduced, leaving the region exposed to more conflict, he said.

“We could see that world becoming a very violent one,” said Zeihan, former chief of Middle East and East Asia analysis for Strategic Forecasting. “If the United States isn’t getting any crude from the Gulf, what benefit does it have in policing the Gulf anymore? All of the geopolitical flux that wracks that region regularly suddenly isn’t our problem.”

Brazil‘s state-controlled Petroleo Brasileiro SA in November said the offshore Tupi field may hold 8 billion barrels of recoverable crude. Among discoveries in the past 30 years, only the 15-billion-barrel Kashagan field in Kazakhstan is larger.

Haroldo Lima, director of the country’s oil agency, last week said another subsea field, Carioca, may have 33 billion barrels of oil. That would be the third biggest field in history, behind only the Ghawar field in Saudi Arabia and Burgan in Kuwait.

Zeihan said that beyond supply gains from Brazil, it will take a tripling of Canadian oil-sands output and greater fuel efficiency to end Western reliance on Middle East oil.

The U.S. imports about 10 million barrels of oil a day, or 66 percent of its needs, according to the Energy Department in Washington. Saudi Arabia was the second-largest supplier in January, behind Canada.

Persian Gulf nations accounted for 23 percent of U.S. imports, compared with Brazil’s 1.7 percent share. Brazilian crude output rose 1.9 percent last year to 2.14 million barrels, according to the International Energy Agency.

“The finds they’ve got so far are just the tip of the iceberg,” Zeihan said. ‘Brazil is going to change the balance of the global oil markets, and Petrobras will become a geopolitical supermajor.'”


Now that is a future that is worth thinking about, even if it may take a long time to realize.